Know Your Student Loan Options

If you’re struggling to repay student loans, delinquent on your student loans or have already defaulted on your student loans, you may be able to get temporary or permanent relief from making payments.

One common mistake struggling student loan borrowers make is to postpone payment on their student loan (including deferment and forbearance) when better options may be available. Deferment and Forbearance are temporary fixes (1-3 years) and do not address underlying financial issues which may require budget counseling.

When you postpone your student loans, you may most likely be responsible for paying the interest that accrues (accumulates) during the period of postponement. This will increase the amount you owe and the question that you must ask yourself is: If I cannot afford to make my payment today, will I be able to make a higher payment in 1-3 years when my balance goes up?

American Consumer Credit Counseling can help you explore your options regardless of how much you owe or your loan status (current/delinquent/default) including:

Eliminating the loan altogether through loan cancellation

Considering other, more affordable payment plans or loan consolidation. Monthly payments on some income-driven plans can be as low as $0.

Postponing payments through deferment or forbearance programs to avoid delinquency/default

If you have are delinquent or in default on your loans (1-270 days behind on loan payments), you must take actions to avoid default!
When you default on your student loans, you will suffer negative consequences. For example:

Your credit will be damaged.

Your loan balance will increase dramatically as collection fees of up to 18-25% of loan balance are added.

The IRS can intercept any income tax refund you may be entitled to until your student loans are paid in full.

The government can take (“garnish”) a limited portion of your paycheck.

The government can take some federal benefit payments (including Social security retirement benefits and Social Security disability benefits) as reimbursement for student loans.

The government and private lenders can sue you to collect defaulted student loans. Unlike other debts, there is no time limit on suing to collect student loans -- you can be sued indefinitely.

Don’t get discouraged if you are in default! Our counselors can help you explore your options for getting out of default including Loan repayment (payment can be as low as $0), loan rehabilitation, and loan consolidation.